|
 OHIO USE TAX UPDATE
The Ohio Department of Taxation has announced its intention to audit or send a tax bill to any Ohio Company that is not registered for Ohio use tax. Use tax is a tax that wasn't paid but should have been, on taxable property or services your business purchased. It most often occurs when a business purchases goods in-state, out-of-state or over the Internet, and the vendor does not collect Ohio sales tax.
The state will begin issuing letters to approximately 380,000 companies it has identified that do not have a use tax account. If your business ignores the notice, it could be audited, or the state could send you a notice estimating the amount of use tax you owe.
If your business doesn't have a use tax account, taking action quickly will help you avoid penalties and a longer look back period. The Department developed a voluntary disclosure agreement program, or VDA, that is more favorable if entered into before the state contacts you. When filing a VDA, the state requires a review of 36 months (from the date you notify the state of your tax obligation) of purchases. If a VDA is filed after notification the minimum look back period is 48 months.
If you wait until the state contacts you, the look-back period extends four years. However, if you choose to ignore the state's notice, you could be subject to an audit of at least seven years of purchases.
If your company is not registered for Ohio use tax, review your potential exposure for the last four to seven years to determine if initiating the filing of a VDA is warranted. If you have a potential liability the VDA may be filed anonymously by a representative. The company may remain anonymous until the agreement is ready for signature.
| 
